Correlation Between InPlay Oil and ALGOMA STEEL
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and ALGOMA STEEL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining InPlay Oil and ALGOMA STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and ALGOMA STEEL GROUP, you can compare the effects of market volatilities on InPlay Oil and ALGOMA STEEL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in InPlay Oil with a short position of ALGOMA STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and ALGOMA STEEL.
Diversification Opportunities for InPlay Oil and ALGOMA STEEL
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InPlay and ALGOMA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and ALGOMA STEEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALGOMA STEEL GROUP and InPlay Oil is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on InPlay Oil Corp are associated (or correlated) with ALGOMA STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALGOMA STEEL GROUP has no effect on the direction of InPlay Oil i.e., InPlay Oil and ALGOMA STEEL go up and down completely randomly.
Pair Corralation between InPlay Oil and ALGOMA STEEL
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 1.25 times more return on investment than ALGOMA STEEL. However, InPlay Oil is 1.25 times more volatile than ALGOMA STEEL GROUP. It trades about 0.03 of its potential returns per unit of risk. ALGOMA STEEL GROUP is currently generating about -0.25 per unit of risk. If you would invest 115.00 in InPlay Oil Corp on October 16, 2024 and sell it today you would earn a total of 2.00 from holding InPlay Oil Corp or generate 1.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. ALGOMA STEEL GROUP
Performance |
| Timeline |
| InPlay Oil Corp |
| ALGOMA STEEL GROUP |
InPlay Oil and ALGOMA STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and ALGOMA STEEL
The main advantage of trading using opposite InPlay Oil and ALGOMA STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, ALGOMA STEEL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ALGOMA STEEL will offset losses from the drop in ALGOMA STEEL's long position.| InPlay Oil vs. MEDCAW INVESTMENTS LS 01 | InPlay Oil vs. APPLIED MATERIALS | InPlay Oil vs. THRACE PLASTICS | InPlay Oil vs. VULCAN MATERIALS |
| ALGOMA STEEL vs. USWE SPORTS AB | ALGOMA STEEL vs. Playmates Toys Limited | ALGOMA STEEL vs. InPlay Oil Corp | ALGOMA STEEL vs. T MOBILE INCDL 00001 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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